A CONSUMER GUIDE TO AUTO INSURANCE

[Pages:20]A CONSUMER GUIDE TO

AUTO INSURANCE

FOR TEEN & YOUNG ADULT DRIVERS

A CONSUMER GUIDE TO

AUTO INSURANCE

FOR TEEN & YO U N G A D U LT D R I V E R S

INSURANCE ADMINISTRATION

A CONSUMER GUIDE TO AUTO INSURANCE FOR TEEN & YOUNG ADULT DRIVERS

TABLE OF CONTENTS

Who We Are . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Required Auto Insurance Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Other Coverage Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Consequences of Failing to Maintain the Minimum Required Insurance . . . . . . . 6 Factors Affecting Auto Insurance Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Tips for Reducing Auto Insurance Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Driving Information and Tips for Young Drivers . . . . . . . . . . . . . . . . . . . . . . . . . 9 Information About the Privilege to Drive for Young Drivers . . . . . . . . . . . . . . . . 10 What To Do if You Can't Find Insurance as a Young Driver . . . . . . . . . . . . . . . . 11 Where to Obtain More Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 How to File a Complaint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Maryland Insurance Administration ? 800-492-6116 ? insurance.

A CONSUMER GUIDE TO AUTO INSURANCE FOR TEEN & YOUNG ADULT DRIVERS

WHO WE ARE

The Maryland Insurance Administration (MIA) is an independent state agency that regulates Maryland's insurance marketplace and protects consumers by ensuring that insurers and insurance producers (agents and brokers) act in accordance with insurance laws . We produced this guide to help educate Maryland residents about auto insurance for teen and young adult drivers . The Insurance Administration is also responsible for investigating and resolving complaints and questions concerning insurers that conduct business in Maryland .

INTRODUCTION

Most teens can't wait to earn the privilege to drive . . . alone and away from parents' protective eyes . Statistics show that teenagers are at the highest risk of a crash or injury during their first two years of driving . Much of this is due to a simple lack of experience . Driver error is also precipitated by such distractions as talking on a cell phone, sending or reading text messages, conversing with passengers, smoking, eating or listening to music . Did you know that this simple lack of experience, combined with any driving infractions, will greatly affect the auto insurance premiums your family pays? That is why the Maryland Insurance Administration has prepared this guide . It provides an overview of Maryland's insurance laws and helpful tips on how to reduce your family's auto insurance premiums .

Maryland Insurance Administration ? 800-492-6116 ? insurance. 1

A CONSUMER GUIDE TO AUTO INSURANCE FOR TEEN & YOUNG ADULT DRIVERS

REQUIRED AUTO INSURANCE COVERAGE

Maryland law requires that each motor vehicle owner obtain insurance coverage on a motor vehicle before it is registered. Coverages mandated by law include liability coverage, uninsured motorist coverage, and personal injury protection; other coverages, as discussed later, are optional. These mandatory coverages are described generally below. To determine the specific terms of coverage and monetary limits you have under your policy, you will need to read your policy forms and endorsements.

?Liability Coverage: This mandatory coverage pays for damages to another person or another person's property that result from an accident where you are at fault. This coverage typically extends to a member of your family who is living with you or to a person to whom you gave permission to operate your vehicle. If you're sued because of the accident, this coverage will also pay the cost of your legal defense. Liability coverage is often split into two separate coverages: (1) bodily injury, and (2) property damage.

1.Bodily Injury (BI): When another person sustains injuries or dies as a result of an accident for which you are at fault, BI coverage pays that person's damages up to the policy maximum. Although the terms of coverage are defined in each policy, such damages generally include medical expenses and lost income, as well as pain and suffering. The policy may provide coverage to passengers in your vehicle, operators and passengers in another vehicle involved in the accident and/or to a pedestrian(s). For all policies written or renewed after January 1, 2011, Maryland law requires the minimum bodily injury coverage each driver must have is $30,000 per person per accident and $60,000 total per accident.

2.Property Damage (PD): Property damage coverage pays, up to the policy limits, for damages to another person's car or property, such as fences, mailboxes, buildings, utility poles, signs or trees, that are the result of an accident where you are at fault. Maryland law requires that each driver have, at minimum, property damage coverage in the amount of $15,000 per accident.

2 Maryland Insurance Administration ? 800-492-6116 ? insurance.

A CONSUMER GUIDE TO AUTO INSURANCE FOR TEEN & YOUNG ADULT DRIVERS

Although state law sets a minimum level of coverage, you may purchase higher limits of both types of coverages if you wish. Also, by law, your insurer must offer you liability coverage for claims made by a family member in the same amount as the liability coverage for claims made by a nonfamily member.

NOTE: You may want to consider buying higher coverage limits, because the state minimums may not be enough to fully protect you in the event of a serious accident claim or lawsuit. Most vehicles today are worth more than $15,000, and medical bills for injuries could easily exceed $30,000 per person or $60,000 per accident if several people are injured. If you are found at fault for an accident, and the damages exceed your insurance limits, you can be held personally responsible for those amounts not covered by your insurance. You should decide if your financial condition warrants your purchase of higher coverage limits. The higher coverage limits will result in a higher insurance premium for your policy. You might wish to obtain quotes for policies with different coverage limits so that you know you are getting the coverage you want at a price you can afford.

?Uninsured Motorist Coverage (UM): This mandatory coverage pays you and the occupants of your vehicle for bodily injuries or property damage arising out of an accident involving an uninsured vehicle or a hit-and-run vehicle. It will also protect you in the event that you are a pedestrian struck by an uninsured motor vehicle. For all policies written or renewed after January 1, 2011, Maryland law requires, at minimum, uninsured motorist coverage of $30,000 per person per accident and $60,000 total per accident for bodily injury and $15,000 per accident for property damage. By statute, you are entitled to purchase UM bodily injury coverage in the same amounts as the liability bodily injury coverage you have on your policy or you may choose to waive any amount of coverage in excess of the statutory minimums.

In Maryland, UM coverage also includes underinsured motorist coverage, which is known as UIM coverage. It provides you with property damage and bodily injury protection in the event you are involved in an accident where the at-fault driver has an insurance policy with liability limits that are less than your UM limits, and your damages or injuries exceed the at-fault driver's available limits. You then can claim the difference under your own insurance policy.

Maryland Insurance Administration ? 800-492-6116 ? insurance. 3

A CONSUMER GUIDE TO AUTO INSURANCE FOR TEEN & YOUNG ADULT DRIVERS

Personal Injury Protection (PIP): Personal Injury Protection (PIP) insurance provides reimbursement for some types of lost income and medical expenses for injuries sustained as a result of an accident, regardless of fault. Maryland law requires minimum coverage of $2,500. If you choose to purchase PIP coverage for all insured drivers and residents of the household above 16 years of age, this is known as "Full PIP." You may, however, elect not to purchase a portion of Full PIP. When you decline to purchase PIP for any listed driver and family members of your household (over 16 years of age), this is known as "Limited PIP". Some policyholders who have health insurance coverage may choose to waive PIP coverage in order to reduce the premium on the policy. Please note, however, that PIP is designed to ensure that medical expenses are paid promptly to limit the economic harm you may suffer due to injuries from an auto accident. Many policyholders pay the extra expense associated with PIP in order to have coverage for lost wages. Others purchase PIP so that they have a second source of recovery when being treated for accident-related injuries. If you meet certain conditions, MAIF and some other insurance companies may permit you to reject all PIP coverage. Ask your producer or company to learn more.

OTHER COVERAGE OPTIONS

There are other types of coverages, including collision and comprehensive coverage, which, while not legally required, are worth your consideration. If you have an auto loan, your lender may require you to carry comprehensive and/or collision coverages to protect the lender's financial interest in your vehicle.

? Collision Coverage: Pays for repairs to your vehicle or, in the event of a total loss, will pay you the fair market value of your vehicle prior to the accident, when the vehicle is in a collision or overturns. Collision coverage is available regardless of who caused the accident, but is subject to a deductible.

? Comprehensive Coverage (also known as Other Than Collision): Pays for damage to your car resulting from causes other than an accident, such as vandalism, theft, glass breakage not resulting from an accident, or hitting an animal with a car. This coverage is also subject to a deductible.

4 Maryland Insurance Administration ? 800-492-6116 ? insurance.

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